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Wire Transfer Fees

posted by Adam Levitin

I recently received a reimbursement payment from an Israeli university for some travel expenses for a talk.  The reimbursement was for $553 and was done via wire transfer.  To my surprise, my account was only credited with $525.  $28 was taken out as a fee.  I inquired with my bank about this, and they said that they didn't charge the fee--it must have been an intermediary bank.  But the wire transfer receipt didn't indicate any intermediary. In fact, I was surprised to hear that there was an intermediary--the transfer was from one of Israel's largest banks to the largest bank in the United States.

I'm rather puzzled by this fee.  I didn't agree to it, as far as I know (although who knows what is buried in my bank account agreement).  There was no indication of how it was calculated, etc., or to whom it was paid, only an indication that $28 was taken out of the transfer.  

For $28, it simply isn't worth the time and effort to try and track this down on the Israeli end. But this leaves me feeling quite puzzled about my rights.  I'm really surprised to have been hit with a bank fee by an unknown entity with no explanation of the calculation and without any agreement to it. But then this is the world of wire transfers, where typical consumer protections like EFTA and TILA don't exist.  

Comments

What I would tell a client is that if he wanted to pursue the matter, despite the cost-benefit issue you note, he should politely complain to the Israeli university that he is still owed $28. There is no certainty that any useful information would result, but it might.

A number of years ago, pre PayPal, I sent a wire from the US to Australia to pay for an eBay purchase.
I went into the local branch of my bank and made sure that I paid the necessary fees so that the recipient would receive the correct amount.
A day or two later I received an email from the recipient advising me that the payment was $20 short.
Eventually after a few phone calls to my bank it transpired that the $20 was a fee levied by an intermediary bank in the US. I asked why I hadn't been advised of this beforehand, the response was that they don't know beforehand what the final cost will be as they don't know how many intermediaries it will go through or what each will charge.
To my disbelief, the bank person I was dealing with seemed to think that it was perfectly logical to send a wire without knowing how much the recipient would eventually receive.

As an international banker: these are called "lifting fees" and are really common on cross-border "high value" wire payments. Even thought the payment was under $600, if it was sent via wire, it's considered "high value." These lifting fees are imposed by banks in the transfer chain - you may never even know they're there. For instance, let's say you bank with Wells Fargo and the sender banks with Bank Hapoalim. Maybe Hapoalim has it's USD correspondent account with Citibank, not Wells - in that case, Hapoalim instructs Citi to send the cash to your account at Wells and debit Hapoalim's USD account. Citi charges this fee to do that service.

Payment areas, like SEPA, are supposed to eliminate lifting fees on cross-border Euro payments. But outside of the Eurozone, this still is a big problem for remittances.

Adam, you should make them address it in full.

That's a big percentage. It would be worth it to be able to write about it.

Clivel nailed it:

My payment deposit amount is less than the payment amount reported. Why?

Funds transfer payments involve “lifting fees”. Lifting fees are fees that are subtracted from the value of the funds transfer by various parties in the funds transfer process - such as your bank and your bank’s correspondent bank. Depending upon the banking and market practice within each country, an international currency exchange funds transfer will occasionally have lifting fees.

In connection with my recent selling of a Houston home and the buying of a Raleigh home, I had sales proceeds wired into, and a partial down payment wired out of, my bank account. I incurred a transfer fee on both ends. I was informed that a fee would be incurred (and the exact amount on the wire out, but I don't recall being told the amount on the wire in). I asked my bank to waive the fee, given my status as a long-standing customer. No luck. Oh well.

Where a party could be truly harmed by such a fee is if a specific amount had to reach an intended party (e.g., to trigger an option purchase contract) and somewhere along the line the proceeds diminished because one or more fees were lifted. A party who was not told on the front end that such fees might be incurred (who presumably then could adjust the wire amount upward to accommodate the fee) could very well lose its option purchase rights. Yikes!

Adam, as noted above, these fees are much more likely levied by either your own bank or an in-between US correspondent bank for handling an international wire transfer. Ask. I had the same thing happen to me years ago by a big U.S. bank; when I speak in foreign countries now I have the reimbursements sent to my credit union-- no fee.

Adam, we know your time is valuable, but it is also the prinicple of the thing. If you can stomach it, please pursue it and let us know how it comes out. Your readers will benefit greatly!

It's f'in bs. Use paypal. Only banks could get away with this lack of transparency.

Lifting fees are frowned upon in United States law, unless authorized by the originator. UCC 4A-302(d). This is to avoid inadvertent breaches of contract. See comment 3. However, Article 4A does not apply to consumers, and foreign law may differ.

Does Adam propose regulation of wire fees, would a credit card especially capped be cheaper, if adam had a paypal or merchant account with the card companies given europe's regulation of fees although I note that every justification has its laws, it could be cheaper or any other country with rights.

I do not have an opinion on wire transfer fees, but it seems obvious that if its a hidden tax as well, it should be dealt with at least following the logic
if one is better or worse I am not sure, however the lack of consumer protections and high fees suggests that using a visa/mastercard is favorable.

Indeed, there is quite a puzzle on what happened to the $28 during the transfer. There is much to learn with these wire transfer fees. This site is informative: http://bestmerchantaccountsite.com/.

Check it out. Thanks for sharing. Keep it up.

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